Many Australians spend too little in retirement

Saving as you approach retirement is wise and highly recommended. However, as you approach retirement it’s important to also acknowledge the effects of spending too little once you get there.

You don’t need to go on an irresponsible spending spree in your first day of retirement. But, unless you’re determined to leave behind a significantly large inheritance, you can probably spend more than you think.

The growing trend of under spending in retirement

In the lead up to retired life it is of course important to focus on budgeting correctly and maximising your super contributions. However, once you retire it’s just as important to shift your focus to enjoying your savings.

Some economists have found that Australians are becoming increasingly reluctant to spend their savings in retirement. This trend means that many people are passing away wealthier than when they entered retirement.1

The current tax incentives for investing in superannuation can make it tempting to save as much of it as you can.

Australia’s rules for minimum annual drawdowns of super savings

In order for your investment earnings to be tax free, current legislation states:

If you’re in your late 60s you must withdraw at least 5 per cent of your super each year in the form of an income stream

When you reach your 95, you must withdraw at least 14 per cent in the form of an income stream. If you’re aged between 90-94 you must withdraw at least 11%.

These rules are a helpful guideline to follow. However, drawing down a higher percentage each year could benefit your lifestyle.

Keep in mind that reaching retirement means that you’ve worked hard for many years. It's a time to consciously invest in your goal standard of living and enjoy, more so than to simply build up your wealth.

Get ready for retirement in 5 easy steps today!

Adjusting from saving mode to spending mode

After a lifetime of saving and investing wisely, it can be tricky to change gears when you retire.

Assess your current financial situation and gain an outline of your income, bills and lifestyle spending – all in a few quick steps.

If you’re worried about the rising cost of living and whether you’ll have enough to last your retirement, StatePlus can help.

Your planner will keep your finances on track so you can focus on enjoying retirement.

We helped Nalini build and maintain the confidence she needed for a comfortable retirement:

"Once I met Ben, our planner, I just felt confident. Confident that what he was saying was going to work. We’ve been with him for the last 10 years and it’s nice to be able to depend on someone’s advice. He’s given us a lifestyle that we are able to maintain."

Looking for a way to help you adjust?

Your StatePlus retirement planner has the expertise to manage your money, so you stay on track for retirement and meet the needs of your family.

We have helped over 60,500 Australians and their families who work in the public sector to spend their retirement with financial confidence. We can help you develop an integrated and adaptable life plan to ensure the security of your future.